Tesla is slashing employee pay and furloughing all hourly workers in the US after the coronavirus pandemic forced the firm to shutter its California car plant.
The automaker is temporarily cutting pay for salaried employees and furloughing staff on hourly pay, according to a leaked internal email sent to staff Tuesday evening.
The move comes just one month after controversial boss Elon Musk dismissed mounting fears over the outbreak as ‘dumb’.
Tesla plans to resume production of electric cars at its Fremont factory on May 4, said the email from the company’s head of North American HR Valerie Workman seen by CNBC.
Robots work on a Tesla Model X in the factory in Fremont, California: Tesla is slashing employee pay and furloughing all hourly workers after the coronavirus pandemic forced the firm to shutter the plant
Pay cuts are being staggered by seniority level, with Vice Presidents and above taking a 30 percent cut, Directors and above taking a 20 percent cut, and a 10 percent cut for everyone else.
The reduction in salary will continue until the end of the second quarter, the email said.
Furloughed workers will not be paid but will retain their healthcare benefits, it read.
Tesla was forced to halt production at its main car factory in Fremont, California, on March 23.
The automaker is temporarily cutting pay for salaried employees and furloughing staff on hourly pay, according to a leaked internal email sent to staff Tuesday evening
Tesla plans to resume production of electric cars at its Fremont factory (above) on May 4, said the email from the company’s head of North American HR Valerie Workman
CARMAKERS SHUTTER AMID PANDEMIC
Honda and Nissan also furloughed thousands of workers at their US operations Tuesday.
A spokesman for Honda, which employs about 18,400 workers at plants in Alabama, Indiana and Ohio, said the Japanese automaker would guarantee salaries through Sunday after suspending operations on March 23. Honda’s plants will be closed through May 1.
Nissan said it was temporarily laying off about 10,000 hourly workers in the US effective April 6.
It has suspended operations at its US manufacturing facilities through late April. Operations at Honda’s Powersports plant in South Carolina, which makes ATVs, have been suspended since March 26.
Automakers are facing a dramatic drop in sales in the US, after some states barred dealers from selling new cars while ‘stay-at-home’ orders are in place. Fiat Chrysler Automobiles NV on Monday extended its shutdown of U.S. and Canadian plants until May 4.
Toyota Motor Corp has halted its US and Canadian production through April 17. A Toyota spokesman said it has not furloughed full-time US employees.
Its solar panel factory in New York also closed and at the Nevada Gigafactory the workforce shrank by ‘more than 75 percent.’
Most workers were placed on paid leave but the leaked email shows workers will now be furloughed and not receive any pay.
The email advises staff to seek unemployment benefits.
Any workers who are sick or ‘uncomfortable coming to work’ are also encouraged to stay home.
The company will ‘respect your decision and you will not be penalized’, according to the email.
Musk, who was not referenced in the communication, is known for having notoriously high expectations of his staff.
He has come under fire on several occasions over allegations that his workers are not allowed to take sick days and are expected to spend all their time focused on ‘the mission’.
In 2015, he was slammed when he reportedly disciplined an employee for missing a company meeting because he was attending the birth of his child.
Another employee blew the whistle saying that when he asked Musk if he could leave to see his family, he was told he was ‘definitely not on board with Tesla’s mission and values.’
The move comes just one month after controversial boss Elon Musk dismissed mounting fears over the outbreak as ‘dumb’
In the Tesla ‘Anti-handbook handbook’, leaked in February, employees are told that they must use their ‘Paid time off’ if they have accrued it for sick leave – otherwise they will go unpaid.
The move to cut pay and furlough staff comes as Musk has repeatedly downplayed the severity of the global health crisis.
On March 6, as the world watched the global outbreak unfold, the outspoken boss took to Twitter to dismiss growing fears as ‘dumb’.
‘The coronavirus panic is dumb,’ Musk tweeted.
His flippant comment came the same day the US death toll from coronavirus rose to 17.
Later in the month, he then sparked outrage for a Tweet many deemed irresponsible where he said children were ‘immune’ the virus.
‘Kids are essentially immune, but elderly with existing conditions are vulnerable. Family gatherings with close contact between kids & grandparents probably most risky,’ he tweeted on March 19.
The controversial CEO seemed to backpedal on his flippancy just days later when he pledged to reopen Tesla’s New York factory ‘as soon as humanly possible’ to help make and distribute ventilators for the hard-hit state.
‘Giga New York will reopen for ventilator production as soon as humanly possible. We will do anything in our power to help the citizens of New York,’ the billionaire said in a Tweet on March 25.
Musk also bought 1,000 ventilators in China and shipped them to the US, where he delivered them to a California hospital to help with the treatment of COVID-19 patients.
TESLA’S EMAIL TO STAFF IN FULL:
Thank you for your continued commitment to Tesla and our mission during this unprecedented time. We know that the uncertainty has not been easy, and we are doing everything we can to keep you safe and informed while also navigating the changes around the world.
While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans.
Starting Monday, April 13, we are implementing the below actions as part of a broader effort to manage costs. This is a shared sacrifice across the company that will allow us to progress during these challenging times.
Pay will be temporarily reduced for salaried employees.
- For U.S. employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else.
- For non-U.S. employees, there will also be comparable reductions, of which the specifics will be communicated by the local leadership team in accordance with local laws and works-councils.
- These reductions are expected to be in place until the end of Q2
Employees who cannot work at home and have not been assigned to critical work onsite will be furloughed.
- Under furlough, you remain an employee of Tesla (without pay) and retain your healthcare benefits. You will not report to work until the furlough ends and you are directed to return by management, which we expect to be May 4.
- A furlough notice will be emailed to you in the coming days with additional instructions on how to apply for unemployment benefits through your state agency.
- For the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take home pay.
- Certain employees will be assigned to critical functions and they will continue to report onsite. Those employees will be communicated to directly by their manager or HR partner.
For the merit review cycle:
- Salary and hourly rate adjustments will be put on hold.
- Equity grants will be on hold as well.
If you would like to take a voluntary leave of absence, as some have reached out to request, please discuss with your manager and HR partner.
We continue to monitor the situation closely, and our top priority is to ensure the safety of our employees. As usual, for those who are onsite, if you are sick or are uncomfortable coming to work, please contact your manager and stay at home.
We respect your decision and you will not be penalized. For HR-related questions, contact your HR partner or email [address redacted]
Thank you all so very much for everything you do to ensure the success of our company.
Valerie Capers Workman | North America HR+